Governor of the Central Bank of Cyprus Constantinos Herodotou has spoken of a new culture of compliance in Cyprus banks on anti-money laundering since 2013 and that progress so far is beginning to be recognised abroad.

Herodotou was addressing the 9th Nicosia Economic Congress on “the Cyprus Economy the way forward.”

According to the Central Bank Governor “there has been tremendous progress in the post crisis years to restructure our economy and our banking sector and to enhance the prospects of a brighter future for the citizens of our country.

“GDP growth has been restored,” he noted, adding that “we consider it sustainable because it is very broad based.” “There is no single reliance on any one sector,” he said.

According to Herodotou, “this is much better than what drove GDP growth in the pre-crisis years.” This, he added, “is also widely recognised but we still have work to do relating mainly to legacy issues in order to strengthen our gains further.”

At the same time, he acknowledged that “there is also no doubt that there are significant interactions between the challenges we are facing and the effective participation of the Central Bank in eurosystem policy formulation.”

“As the new governor I am fully aware of the responsibility I am undertaking to deal with these issues,” he said and pledged that together with his colleagues, “we will give our best to achieve these goals in close cooperation with all the relevant authorities and institutions in Cyprus, Europe and internationally.”

Referring to NPLs Herodotou said that there has been “tremendous progress” during the last years.

At their peak, he noted, NPLs were roughly 28 billion euros whereas now there are around 11 billion euros in the banking sector.

This, he said, “is a significant reduction, especially when compared to the size of the GDP of the country”, adding that “the reduction is almost equal to 90% of our GDP”.

The Central Bank Governor pointed out however that “there is still a significant amount of legacy NPLs that we have to dealt with in order to bring the relevant rations at the threshold levels required.”

Herodotou said that with the legislative changes approved by the Parliament last year the banks “now have a complete range of options or tools they can use to deal more effectively with NPLs.” He further noted that various joint ventures between Cyprus banks and specialist loan servicers should also start delivering results within 2019.”

Since 2013-2014, he said, “the banking sector has also been enhancing the anti-money laundering and counter terror financing efforts.” It is clear, he stressed, “that a new culture of compliance is being established at the Cyprus banks.”

The Central Bank Governor also spoke of anti-money laundering efforts pointing out that they “are beginning to be recognised abroad.” This, he explained, is due to better cooperation between Cyprus authorities and banks with foreign authorities and banks and to the “coordinated and targeted effort initiated by the Central Bank of Cyprus, the Association of Cyprus Banks, the banks themselves, the Ministry of Finance and the Ministry of Foreign Affairs.”

This effort, he explained, “aims to inform our partners and stakeholders of the progress made so far but has also enabled us to open and strengthen international relationships that will allow closer and better cooperation against money laundering and terrorist financing.”

“I truly believe that this effort and project is a great example of coordination and cooperation between Cyprus Authorities and entities and shows that we can achieve a lot when we work together on common objectives,” he said.

He added that “there will be other initiatives” by the Central Bank in the future.